The document discusses the major housing issues facing the Muslim world and Asia. It notes that over 1 billion Muslims worldwide represent half of the poor on the planet and have an annual housing need of 8 million units, mostly in the low-income segment. Rapid urbanization is exacerbating the existing housing shortage. The document outlines country-specific housing challenges and potential solutions such as expanding affordable housing supply and increasing access to housing finance for low-income groups through instruments like housing microfinance.

1. By: Zaigham M. Rizvi
Global Islamic Microfinance Forum
Dec 8-10, 2012- Dubai, UAE

2. Housing Issue: Snapshot of Muslim World and Asia

3.  The Muslim world represents 1 of 4 humans on the planet
 Nearly the same ratio in number of countries
 Represents 1 of 2 poor on the planet
 A great challenge of widening demand/supply gap, adding
to the already existing housing backlog
 Most of the housing backlog and short supply is in low-
income segment of the population
 Population growth and urbanization are further
compounding the existing urban housing backlog
 Rising costs (land, construction, construction materials
etc.) are making housing unaffordable for the poor

4.  IDB study suggests housing needs of the Muslim World at
8 mn units/year, nearly all in Low-Income Segment
 MENA 3.2 mn;
 Asia 2.7 mn; and
 Africa/others 2.3 mn.
 Urban population likely to rise from 1/4th to 1/3rd of total
 Rapid Urbanization a major issue in low income housing
 Need for new housing of 8 mn due to population growth is
based on 5-5.5/Household and population growth at 2.5%
 Urbanization and population growth further increases the
incremental housing needs in major metropolitans
 Supply is short and is 30-40% on new demand for housing

5.  As most of housing shortage is in low income segment, poor
need empowerment in housing finance
 Institutional Housing Finance is either non-existent or in
infancy stages in most of the Muslim World (Afghanistan and
some African Countries)
 Slightly advanced in some others (Malaysia, Turkey, Egypt,
Morocco, Indonesia, Pakistan and Saudi Arabia)
 Regulatory Framework also needs major upgradation
 Additional challenges include:
 Role and responsibilities of Specialized Housing Finance
Institutions (HFIs) and Commercial Banks (CBs)
 Long Term Liquidity Facility Institutions and Instruments
 Role of Capital markets

6.  An issue of faith e.g. Afghanistan with nearly 100% Muslim
Population
 Also an issue of Financial Inclusion. Even if conventional
finance is available, Faith-Based clients do not avail it
 Standardization and Diversification of RE/Housing
Products both on Asset Side and Liability Side
 Islamic REITS and MBS Products
 Role of Islamic Banks and Islamic Windows of
Conventional Banks
 Need for Research and Development Center

7.  Region, excluding China, represents more than 1/4th of Worlds
population and ½ of the poor on the planet
 Including China, Asia-Pacific represents ½ of the Worlds
population
 Region is very low in terms of Mortgage Finance penetration
 Average Mortgage Debt to GDP Ratio 3.3
 Region is faced with massive housing shortage
 India alone faces an Urban Housing shortage of 27 mn
 Nearly entire urban shortage is in Low-Income Category
 Persons per Room Density, a comparison:
 India/Pakistan is 3.5;
 EU is 1.1; and
 USA is 0.5

8.  In 1950, about 232 mn people lived in urban areas representing
17% of Asia’s total population. Today it is more than 1/3rd and by
2025 nearly ½ of Asian population will be urban
 By 2030, 1 of every 2 urban residents in the world will reside in
Asia
 In India, as per census 2001, total housing stock was 249 mn
units of which 29% (72 million) were in urban areas. India today
faces an Urban housing shortage of 27 mn units (Pakistan faces
total housing backlog of 8 mn units, whereas it has urban
backlog of around 3 mn)
 Nearly entire urban housing shortage is in Economically Weaker
Sections of society
 India, Thailand, Indonesia, Malaysia , Pakistan, Turkey etc. offer
unique success stories and business models in housing
 The countries facing such challenges could benefit from
knowledge and experience sharing on regional basis

9.  Slums known by various names across the region: Shanty
Towns, Jhopar Patti, Jhuggi, Basti, Katchi Abadi, Squatter
Settlements, legal/illegal habitat, etc
 Shelterless are hidden behind higher persons per room density,
slums and indecent and sub-standard housing
 In extreme cases homeless poor live on footpaths, and even in
abandoned sewerage pipes
 Nearly 50% of major metropolitan habitats in the regions are
slums
 The rules, planners and decision makers have no vision of life
inside these slums, except seeing them in movies
 A two pronged approach is required:
 Slums improvement programs; and
 Slums resettlement and rehabilitation programs

11.  Solutions are being attempted
 Success is being demonstrated
 Answers have no match with quantum of Issue
 Issues we know, Answers we need
 Much more is needed to be done

12. Small and incremental Loans used to
help build incrementally - “Progressive
building strategy”
Loans are often provided with:
Lending and Construction Assistance

13. Karachi & Lahore,
Impacting 40,000 people
Sindh,
Serving 2,500 people
Nationwide
Provision of Housing Finance Loans
AJK, Goth Noor Muhammad, Sindh
& Ehsanpur, Punjab
Post disaster reconstruction and model villages
Azad Jammu & Kashmir and Mianwali, Punjab
Provision of Post Disaster House Rebuilding Loans
Schemes for the poor
Case of Pakistan
Income range – PKR 7,000 to PKR 15,000
Saiban Khuda Ki Basti:
Orangi Pilot Program:
Kashf Foundation & Tameer
Bank:
PPAF:
NRSP:

14. Khuda Ki Basti in Lahore, Pakistan

15. Low-Income Housing
Bottom of Pyramid
and
Housing Microfinance

16. Middle income
Less able to access finance due to
informal income sources or inability to
provide collateral (often due to inability
to secure land title)
Lower-middle and lower income
Difficult to access finance due to low income levels, informal
income sources, and inability to provide collateral
Bottom of the pyramid
No access to finance due to low income levels, informal income sources and
inability to provide collateral
High income
Formal
employment and
title, can obtain
mortgages
Supply: Market rate housing,
private sector
Finance: Mortgage
Supply: Limited market
rate housing, non-profit and
private sector involvement
Finance: Micro-mortgages
Supply: Social housing,
self-built housing
Finance: Housing
microfinance, home
improvement lending
Slum
redevelopment
and upgrading

17. Cost of land
• Land availability
• Land use management, land
allocation
• Land ownership
• Government provision of
serviced land
Cost of construction
• Construction technology
• Local construction materials
• Self-built/incremental
housing
• Fiscal and regulatory
incentives
Expanding the supply of affordable housing is a critical factor in the development of a
successful social housing programme. The greatest challenge in expanding the affordable
housing supply is managing the cost of the housing that is developed.

18.  Nearly 1/5th of population in the Muslim World is a candidate for HMF (Bottom
of Pyramid-BoP)
 At BoP income segment, people are more concerned on Faith-Based Finance
 Issues with HMF are:
 Product Design;
 Outreach;
 MF Housing Microfinance Regulations;
 Income Assessment;
 Appraisal, Surveillance;
 Delivery; and
 Recovery
 Challenges include Cost-efficient Finance , Loan Surveillance , and timely loan
recovery
 Manufacturing scale production, Community-based finance etc
 Credit Guarantee, Management of Default and Loan Realization

19.  Social Housing Finance Institutions (HMFIs)
 Social Housing Finance Institutions with a focus on
slums improvement, Incremental Housing etc
 Sponsor a Shelter Programs: as delivery channels for
Charity, Zakat.
 Specific Regulatory Regimes for HMF, both for
financiers and developers
 Specific Fiscal Regimes on Smart Subsidies and Cross
Subsidies
 Need to define HMF for regulatory and fiscal support

20.  Pakistan
 Afghanistan
 A general overview

21.  Population:
 160-170 million
 2/3rd Rural, 1/3rd Urban
 Major metropolitans:
 Karachi, Lahore, Rawalpindi/Islamabad, Peshawar,
Hyderabad and Faisalabad facing high rate of urbanization
 Karachi: Population 16-17 mn and growing @ of 7 to 8%
 Nearly half of Karachi’s population lives in squatter
settlements (600-800 squatter settlements)
 Karachi only needs 100,000 new housing units per year to
meet natural growth, cover backlog and urbanization
pressure

22. Commercial
Banks
HBFC
(SMH)
HBFC &
Social
Housing
Bank
Social
Housing
Market
Housing
High End
Upper Middle
Lower Middle
Small
Micro
Upto Rs.7,000
Rs.100,000
Rs.30,001 to
Rs.50,000
Rs.15,001 to
Rs.30,000
Rs.7,001 to
Rs.15,000
Rs 7.5
& above
Rs 2.5 ~ 5.0
Rs 1.0~ 2.5
Rs 0.50~Rs.1.0
Rs 0.50
Rs
1 Lac
& above.
High - High
Rs 5.5 to
Rs 7.5 4 %
15 %
20 %
40 %
20 %
1 %
0.300
1.125
1.500
3.000
1.500
0.075
Housing Finance Player Market Segment Income Distribution in %
Mortgage Affordability
(Rupees in millions)
Housing Market Housing Shortage *
(millions)
- Per Capita Income: Rs 9,000 per month
- Minimum Wage Rate Rs.7,000 per month
* Total existing backlog is estimated at 7.5 mn units. The shortage in various income segments is
assumed in the same proportion as per income distribution pattern. However, actual shortage is
much higher in low income segments as opposed to higher income segments.

23.  Afghanistan has a population of nearly 27 mn people
 Most of its population are candidates for HMF
 Three to four decades of war has partially or totally destroyed
institutional and physical infrastructure in many cities
 Land records have been either destroyed or manipulated
 In Kabul, Land Records are now being recreated and computerized
under LIETRA Project
 The only specialized HFI which existed in the past has been closed
down for various reasons
 In Kabul only, an estimated $ 2.5 Bn are needed to repair and
rehabilitate damaged/destroyed housing (World Bank)
 Central Bank of Afghanistan (DAB) is actively working on different
initiatives on housing, and seeks TA and Funding Support

24.  ME and Gulf States: Recent uprising in some ME Countries has
brought to surface the social issue of low-income affordable housing
 Nearly all countries in the region have now allocated huge funds and
have initiated plans and projects to address it
 Most of these programs are based on State Subsidy, and thus would not
be viable and sustainable in the long run.
 Indonesia, over the years has developed and implemented a very
comprehensive program of State Subsidized Pro-Poor Housing.
 Africa has a unique challenge of Low-Income housing, with challenges
of Affordability, HMF, major slums etc.
 In many African Countries, largely Muslim population is a candidate
for Sharia-Compatible Housing Finance

25.  Generally Political Sloganizm
 “Housing for all”,
 “Slums Free Cities”,
 “Maang Raha hai har Insaan-Roti, Kapra, aur Makan” (every individual
is demanding for bread, clothe and house), and so on……
 In some countries delivery on these slogans is SOME, and in most it is
NONE
 Every country is facing a common issue of “shelter less poor” with an
ever increasing backlog
 Recent uprising in the ME has shown that even effluent economies are
no exception
 Regional successful models are to be shared and indigenized
 IDB may assist Al-Huda to set up a digital and physical platform on
country specific Data, Information and Business Models on HMF
 Islamic Development Bank to play a pivotal Role in promoting sharia-
compliant housing finance, more so in housing microfinance

26. Notice:
This document has been prepared by Mr. Zaigham Mahmood Rizvi for the sole purpose of
providing a presentation document to the Global Microfinance Workshop-Dubai to be held on
December 4-5, 2012. The information contained in this document has been compiled by Mr.
Rizvi from self study and from different sources. He is grateful to all those serving this noble
cause in some form or the other.
Mr. Zaigham Mahmood Rizvi
zaigham2r@yahoo.com
• Expert Consultant Housing: The
World Bank
• Adviser Housing: State Bank of
Pakistan
• Secretary General: Asia-Pacific
Union for Housing Finance-APUHF
(www.apuhf.info)